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Responsible investment glossary

We recognise that not everyone uses the same language or terminology when talking about stewardship and responsible investment.

This glossary will explain some of the most common terms.

Carbon neutrality

Carbon neutrality is achieved when the amount of carbon dioxide we release into the atmosphere is no more than the amount we take away. This is also referred to as net zero.

Engagement

Purposeful dialogue between investors and companies on environmental, social and governance (ESG) issues with the intention to influence (or identify the need to influence) company behaviour or improve disclosure.

ESG integration

The systemic and explicit inclusion of environmental, social and governance (ESG) factors into investment analysis and investment decisions.

Exclusions/ Ethical investing

Ethical exclusions funds avoid industries and company practices that cause harm to people or the planet.

Greenwashing

Greenwashing is when a company incorrectly promotes their investment options as being responsible. 

Impact investing

Investments made with the intention to generate positive, measurable social and environmental impact alongside financial return.

Net zero

Net zero is achieved when the amount of carbon dioxide we release into the atmosphere is no more than the amount we take away. This is also referred to as carbon neutrality.

Proxy voting

Using our rights as shareholders to vote at the Annual or Extraordinary General Meetings (AGM/EGMs) of the companies we invest in, usually electronically.

Responsible investment

Responsible investment is an umbrella term used to identify a spectrum of approaches which not only aim to deliver a financial return but are also intentionally seeking to effect positive change. Examples of approaches are: ethical exclusions, responsible practices, sustainable solutions and impact investing.

Responsible practices

Responsible practices funds consider the operational practices of the companies they invest in and encourage them to improve their environmental and social performance.

Sustainability

Meeting present needs, without compromising the ability of future generations to meet their needs.

Sustainable investment

Sustainable funds actively seek to invest in companies that are providing solutions to social and environmental challenges.

Acronyms

  • FRC (Financial Reporting Council)
    The FRC regulate auditors, accountants and actuaries, and we set the UK’s Corporate Governance and Stewardship Codes. They promote transparency and integrity in business. Their work is aimed at investors and others who rely on company reports, audit and high-quality risk management.

  • IA (Investment Association)
    The Investment Association is the trade body that represents UK investment managers.

  • IIGCC (Institutional Investors Group on Climate Change)
    The Institutional Investors Group on Climate Change (IIGCC) is the European membership body for investor collaboration on climate change and the voice of investors taking action for a prosperous, low.

  • PRI (Principles for Responsible Investment)
    Principles for Responsible Investment is a United Nations-supported international network of investors working together to implement its six aspirational principles, often referenced as "the Principles".